If world GDP is $ 75 trillions and world public debt is $ 184 trillions, who’s lending money to the world? how does this affect the bond market?

Technically, it possible to have more debt than actual “wealth” since debt is basically an instrument to use future money with interest.

I’m not too sure about using GDP as a measure of wealth though, cause it’s usually an arbitrary number for private consumption + gross investment + government investment + government spending + (export - imports).

GDP in layman terms is like your income minus expense.

Debt is debt.

Is it possible to have more debt than your income minus expense? (Think mortgage loan) Yes, definitely right.

But is it wise? That is the question to answer to see how it affects the bond market.

For heavily indebted entities like the US government and many Chinese companies, should they not be able to service the debt interest payments, can you imagine the reputational damage it will have to integrity of the bond market? Depending on the scale of the default, it will have a corresponding ripple effect.

Bottom line, having a very large debt/net income ratio is hazardous to both corporates and individuals. #hyflux